The wholesale broker and delegate authority (collectively “specialty”) insurance sector navigated volatile market conditions in Q1 2026. The beginning of the year was shaped by ongoing economic uncertainty driven by stubborn inflation, a cooling labor market, international conflicts, and an unsettled political landscape. Despite these headwinds, the specialty insurance sector saw a sharp uptick in merger and acquisition (M&A) transactions.
For the past few years, deal volumes in the specialty market have been constrained by the low supply of quality acquisition targets, contributing to the record high valuations the sector is currently experiencing. Following a 33% decline in transactions in 2024, activity rebounded strongly in 2025, driven by a nearly 50% year-over-year increase in property and casualty (P&C) specialty sellers.1 While this marked a meaningful recovery, 2025 still ranked as the second lowest year of specialty M&A activity in the last five. This momentum carried over into Q1 2026, as sellers sought to capitalize on elevated valuations.
Against this backdrop, the broader insurance distribution market experienced a volatile start to 2026, including a pullback in valuations for publicly traded brokers. While these declines were partly driven by the market-wide equity sell-off, they also reflected investor concerns around organic growth expectations amid a softening market, as well as emerging risks related to AI-driven distribution models. Notably, MarshBerry’s Broker Composite Index declined nearly 9% in a single day on February 9, 2026, following announcements of new AI-enabled platforms, including Insurify’s partnership with ChatGPT. Although public market fluctuations have historically had a more limited impact on private market valuations, sustained compression in public multiples would inevitably trickle down into the valuations buyers are currently offering well-positioned sellers.
Within the specialty intermediary market, the supply of high-quality firms pursuing transactions remains constrained, continuing to drive strong investor demand. As competition for attractive assets has intensified, including a growing buyer community, valuations reached new highs in 2025. According to MarshBerry data, average all-in valuations (inclusive of base purchase price and earnouts) increased by more than 60% relative to 2020 and over 15% compared to 2024.